For the week of january 20, 2020
QUOTE OF THE WEEK
“The journey of a thousand miles begins with one step.”–Lao Tzu, Chinese philosopher
NATIONAL MARKET UPDATE
Ending the year big, Housing Starts shot up 16.9% in December, to a 1.608 million annual rate, their highest level in 13 years! Gains were seen in all major regions, and starts are now up 40.8% from a year ago.
Building Permits, at a post-recession high in November, took a break in December, down 3.9%. But permits are still at a 1.416 million annual rate, near the 1.5 million needed to take care of population growth and teardowns.
And the future looks bright. Fannie Mae’s latest forecast predicts that just the single-family part of the Housing Starts number should reach 975,000 units this year–the highest level since 2007!
REVIEW OF LAST WEEK
BULLS CHARGE… Bullish investors kept rallying, sending major stock indexes to new record highs. The Wall Streeters were fired up by a trifecta of strong economic data, good earnings, and solid trade progress.
Congress passed a new U.S., Mexico, Canada trade agreement, plus the Phase One trade deal with China was signed, seen by some as a major step in de-escalating trade tensions, though issues remain.
We saw encouraging bank earnings reports, mixed in with blowout Housing Starts, healthy Retail Sales for December and for the year, a jump in the Philly Fed manufacturing index, and rock-bottom jobless claims.
The week ended with the Dow UP 1.5%, to 29,348; the S&P 500 UP 2.0%, to 3,330; and the Nasdaq UP 2.3%, to 9,389.
Good economic news kept bond prices in check, yet the 30YR FNMA 4.0% bond ended UP .03, to $104.25. The national average 30-year fixed mortgage rate held steady, up a mere basis point (0.01%!) in Freddie Mac’s Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?… The Mortgage Bankers Association reports purchase mortgage activity the first week of the year was 8% higher than the year before, at the highest level since 2009.
THIS WEEK’S FORECAST
EXISTING HOME SALES GAIN… In this holiday shortened week, the main economic report we’ll focus on is December Existing Home Sales, expected to continue climbing toward a 5.5 million annual sales rate.
The stock market and bond market are closed today, January 20, in observance of Martin Luther King Jr. Day.
NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months… Most economists are still comfortable forecasting no rate cuts–or hikes–this year. Note: In the lower chart, a 15% probability of change is an 85% probability the rate will stay the same.
Current Fed Funds Rate: 1.50%-1.75%
AFTER FOMC MEETING ON: CONSENSUS
Jan 29 1.50%-1.75%
Mar 18 1.50%-1.75%
Apr 29 1.50%-1.75%
Probability of change from current policy:
AFTER FOMC MEETING ON: CONSENSUS
Jan 29 15%
Mar 18 16%
Apr 29 20%
BUSINESS TIP OF THE WEEK
Now that you’ve set your goals for the year (you have, right?), turn your attention to what’s in front of you today. Put your best effort into what you need to get done now, do that every day, and you’re sure to achieve the long-term results you want.